The FCA has fined SEI Investments (Europe) Limited (SEI), a provider of asset management and wealth management services, for failing to comply with FCA client money rules for over five years.

The firm’s failings are summarised as follows:

It failed on several occasions to perform its internal reconciliations;

It failed on several occasions to ensure that any shortfall or excess identified in its internal reconciliation of client money was paid into or withdrawn from the client bank account by close of business on the day of the internal reconciliation; and

It failed to appreciate that it was using a non-standard method of internal reconciliation.

The FCA concluded that SEI therefore failed to ensure that it maintained its records and accounts in a way that ensured their accuracy.

Failings were found throughout SEI’s client money processes, indicating that SEI’s client money arrangements were inadequate.

In addition, the firm failed to train its employees on operational oversight and responsibility for client money.

The significance of these failings is that had SEI become insolvent, these failings could have led to complications and delay in distribution and placed client money at risk.

Tracey McDermott, director of enforcement and financial crime, stressed that firms holding client assets should ensure they continue to strengthen their management, oversight and controls in this area, and action will be taken against those firms that fall short of the regulator’s client asset requirements. McDermott emphasised that although there was no actual loss of client money in this case, the rules are designed to be preventative.